EPF continues to implement diversification strategies
View(s):The Employee’s Provident Fund (EPF), Sri Lanka’s largest private sector labour force saving fund, is to be further diversified in an era where interest rates are likely to decline in the medium to long term and returns from investments in government secuities and debt instruments only, would not provide sufficiently high returns, the Central Bank revealed.
The EPF would continue to implement diversification strategies to maximise returns in the projected future low interest environment. This was highlighted by the Central Bank in its policy direction and work plan for the New Year “Road Map for Monetary and Financial Sector Policies for 2015 and beyond”, launched in Colombo recently.
The EPF is the largest social security scheme for the employees of institutions and establishments of the private sector, state-run corporations, statutory boards and private enterprises and has a current asset base of Rs. 1.3 trillion.
The fund has made investments in listed and unlisted companies based on the “intrinsic value of the company, its growth prospects, the possible enhancement of share value in the medium to long-term, its governing structures, the viability and prospects of the industry, the quantity of shares available, the future plans, the impact of the growing economy on the company”, the Central Bank statement said.
Central Bank Governor Ajit Nivard Cabraal revealed that the diversification strategy would include making investments in foreign currency denominated instruments while increasing participation in secondary market activities.
Fund management efficiency would be increased with in-depth analysis of investments in compliance with the internal rules and improved risk management, he added.
To further improve its services, the Central Bank plans to provide remote access to information by all the 15 million subscribers through bank ATMs, web and mobile media eliminating the need for members to visit Colombo for EPF services.
Over the recent past, the EPF has made several investments in various listed corporates through the Colombo Stock Exchange, and also in selected unlisted corporates, on the basis of, inter alia, intrinsic value of the company, its growth prospects, the possible enhancement of share value in the medium to long-term, its governing structures, the viability and prospects of the industry, the quantity of shares available, the future plans, the impact of the growing economy on the company, etc, the Bank statement revealed.